ALSO READIndia's retail inflation slightly eases in January Government seeks parliament nod for $13 bln net extra spending Government seeks parliament nod for $13 billion net extra spending India unveils 2018/19 budget aiming faster growth Rising food prices push India's December retail to 17-month high
By Manoj Kumar
NEW DELHI (Reuters) - India's retail inflation eased for the second straight month in February but remained above the 4 percent medium-term target of the Reserve Bank of India (RBI), strengthening views it will hold rates steady at its April meeting rather than raise them.
The central bank, which has kept rates steady since a 25-basis-point cut in August, is widely expected to maintain rates at their current level next month.
January saw annual consumer inflation of 5.1 percent, off the December figure of 5.2 percent, which was the highest rate in 17 months.
Analysts polled by Reuters had predicted February's rate would ease to 4.8 percent from 5.1 percent in January. Forecasts ranged from 4.4 percent to 5.6 percent.
Consumer food prices rose 3.26 percent in February, compared with 4.70 percent in January, as prices of pulses fell more than 17 percent from a year earlier.
Fuel and light inflation stood at 6.8 percent, compared with 7.58 percent in January, while housing inflation stood at 8.28 percent, from 8.33 percent the previous month.
Some economists feel that with annual economic growth climbing to 7.2 percent in the October-December quarter, the RBI could resort to pre-emptive monetary tightening to cool prices.
"We expect the RBI to allude to possible policy tightening at the next meeting in early April, as the concerns on growth slide," Prakash Sakpal, ING Asia economist in Singapore, said in a note published before Monday's data release.
Analysts said retail inflation could accelerate to 6 percent by June and may remain at 5 percent to 6 percent in the financial year that begins on April 1, leading to pre-emptive monetary tightening.
Several analysts now expect one 25-basis-point hike in July-September.
Separately, India's annual industrial output grew 7.5 percent in January, data released on Monday showed, compared with 6.7 percent forecast in a Reuters poll.
The world's seventh largest economy is expected to grow 6.6 percent in the current fiscal year ending in March. The International Monetary Fund expects growth will pick up to 7.4 percent in 2018, and 7.8 percent in 2019.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)